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Neonode (NEON) Hits One-Year Low on High Volume

NEW YORK (TheStreet) -- Neonode (NEON - Get Report) fell to a 52-week low of $2.44 on Tuesday on greater-than-average volume, one day after the tech company held an investor update call.

The company held the call "to update investors on the status of the business and to comment on the recent rumors and speculations about Neonode and the touchscreen market," according to a press release.

The stock was down 9.9% to $2.78 at 3:42 p.m. More than 4.3 million shares had changed hands, compared to the average volume of 1,124,620.

Separately, TheStreet Ratings team rates NEONODE INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate NEONODE INC (NEON) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has decreased by 12.3% when compared to the same quarter one year ago, dropping from -$3.57 million to -$4.01 million.

Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, NEONODE INC's return on equity significantly trails that of both the industry average and the S&P 500.

Net operating cash flow has significantly decreased to -$2.65 million or 59.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

NEON's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.17%, which is also worse than the performance of the S&P 500 Index. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

NEONODE INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NEONODE INC reported poor results of -$0.37 versus -$0.27 in the prior year. This year, the market expects an improvement in earnings (-$0.25 versus -$0.37).